ECB approves 13 banks' capital plans

FRANKFURT, December 13, 2014

The European Central Bank (ECB) gave initial approval to the plans of 13 banks to plug capital holes discovered in health checks, it said yesterday, bringing a landmark examination of the sector almost to a close.

'The supervisory board endorsed the last set of capital plans from the banks where the comprehensive assessment detected a capital shortfall,' a spokesman said.

The plans will now go to the central bank's governing council for final sign off, he said.

'At that point, all 13 banks with remaining capital shortfalls have six or nine months (depending on its origin) to cover the shortfalls and implement their plans,' he said.

In October, the ECB failed roughly one in five of the euro zone's top lenders in its health checks but found that most had since repaired their finances.

Painting a brighter picture than had been expected, the ECB found the biggest problems in Italy, Cyprus and Greece. However, it concluded that banks' capital holes had since chiefly been plugged, leaving only a modest 10 billion euros to be raised.

Italy faces the biggest challenge, with nine of its banks falling short and two still needing to raise funds.

The test, designed to mark a clean start before the ECB takes on supervision of the banks next month, said Monte dei Paschi had the largest capital hole to fill at 2.1 billion euros.

The exercise provided the clearest picture yet of the health of the euro zone's banks more than seven years after the eruption of a financial crisis that almost bankrupted a handful of countries and threatened to fracture the currency bloc.

While 25 of the euro zone's 130 biggest banks failed the health check at the end of last year with a total capital shortfall of 25bn euros, a dozen had already raised 15bn euros this year to make repairs.-Reuters